The Government is now actively encouraging the development market to re-open construction sites and the industry is reacting, with positive steps already taken by a selection of the major national housebuilders to re-commence work on selected sites across the country.

This is promising progress, nonetheless it should also be recognised that any slowdown in the development land market is likely to be experienced for a more extended period.

As such, what action should landowners consider now to achieve a sale in the short term?

From our collective experience of previous market downturns and the present pandemic, key to the success of progressing development transactions in the current climate is a pragmatic approach to the challenges faced by both vendors and purchasers. This needs to ensure a recognition of the potential risks to both parties.
Landowners should be clear with their advisors about their timescale aspirations and what motivates them. Many of our clients are currently focussed on issues such as planning permissions expiring, time limits for tax reliefs, securing vacant possession or other personal circumstances.

Where this is the case, we are achieving the best outcome for our clients by talking openly to identify priorities and ‘red lines’. This allows us to determine strategies that cater for our clients’ needs.
Most importantly, it is essential that parties continue to talk. Some transactions will stall under the current circumstances. Where this is the case, we are ensuring that we maintain dialogue with both our landowning clients and prospective purchasers. In several cases, we are now holding weekly progress calls. This ensures all parties remain ‘on the same page’ and transactional momentum is maintained as much as possible.
In a market downturn, it is typical for alternative mechanisms to be negotiated that seek to reflect the change in circumstances and allow for a sale to progress accordingly. Some can be effective, but we are advising that our clients exercise caution, as some proposals can also create unintended consequences that may look less appealing in the medium to longer term, and with the benefit of hindsight.

Some parties are starting to discuss so-called ‘COVID-19 clauses’. In this situation, landowners should understand clearly that such provisions will turn sale contracts into conditional agreements and quasi options in some cases. As such, whilst this route may offer the certainty of an exchange of contracts in the short term, it may simply ‘kick the can down the road’ and will certainly delay receipt of funds.

If such clauses are being considered, landowners need to think carefully about questions such as how to define a ‘COVID-19 event’ and how to handle the potential for a further wave of the pandemic.

It will also be important to carefully consider other potentially unintended consequences and the use of provisions such as Long Stop Dates.

Some landowners may consider agreeing to requests from purchasers for deferred payment terms as an appropriate compromise to secure a sale in the short term (for example, deferring 50% of the sale proceeds by 12 months after legal completion). Such proposals will assist with purchasers cashflow and as such should only be considered where purchasers maintain their ‘headline’ offers.

Where our clients are inclined to agree to such terms, we are working with them to ensure that adequate security is provided by the purchaser in return, to safeguard our clients against default or non-payment of deferred monies in the future.
It may also be better to simply pause decision making until further certainty is restored to the marketplace. The challenge of course is ‘when?’.

What remains clear is that the impact of this pandemic has the potential to continue to frustrate the development land market for a while longer. Accordingly, we are assisting our clients to adopt a pragmatic approach and establish strategies to ensure they can conclude transactions as quickly as possible.
For further market information, or to speak directly to one of our development professionals, please contact us.
Our specialist teams operate at national level. Select a region below to find your nearest consultant.

Jon leads the Carter Jonas London development team, providing strategic development advice, feasibility and viability studies, acquisition, disposal and marketing advice and advice on structuring and procuring development partnerships. He has 30 years’ experience, working initially in local government and then in consultancy at Donaldsons, Knight Frank and GL Hearn.

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John is Head of the Leeds office and the Planning & Development Team North. John advises clients on proposed development projects throughout the North of England.  He has over 30 years’ experience in residential and commercial development acting for private, corporate, institutional, charity and public sector clients.

This includes site identification, project management of planning and development strategies, valuation and viability appraisals, marketing and sale of development opportunities.

John has specific expertise in Options, Promotional Agreements, Joint Ventures and Conditional Contracts, acting mainly for landowners.  John has been involved in projects such as new settlements, to city centre regeneration, provincial sites, large commercial developments and site sales.

The Development Agency team are currently instructed on 6,500 acres in 150 locations across the North West, Yorkshire and the North East.

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James is Chairman of Carter Jonas.  Formerly Head of the Planning & Development Division, James advises clients on proposed development projects throughout the south of England with nearly 30 years of experience in residential and mixed use development.  This includes site identification, project management of planning and development strategies, valuation and viability appraisals, marketing and sale of development opportunities. He has specific expertise in option, promotion and other development agreements, joint ventures and landowner equalisation agreements. James has been involved in sites ranging from new settlements to city centre regeneration and smaller provincial and rural schemes, and also provides expert witness and independent expert valuation services for dispute resolution.

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Matthew has acted for a wide number of Landowner Clients including:

  • Royal Estate Sandringham
  • Crown Point Estate
  • Cecil Family Trust
  • Greene King Plc
  • North Hertfordshire College
  • Cemex
  • May Gurney
  • Pigeon
  • Advice, marketing, disposal and additional tranche disposal of 1,500 unit Residential Development in Grantham.

Project team principle for disposal of the NHC Centre of the Arts, Hitchin, securing a Development Partner and assembling a professional team to progress an application, sale and disposal of a principal asset within the College’s portfolio 

Mathew has over 29 years' experience in the property industry and has been directly involved Residential Development in East Anglia since 1998. He specialises in Land Disposals and Acquisition; Strategic Land, Promotion and Option Agreements. He has acted for a wide range of private and public sector land owners companies including Greene King, Royal Estate Sandringham; Grant Thornton, Pigeon, Crown Point Estate, Cemex (formerly RMC), The Diocese of Norfolk & Norwich and North Hertfordshire College as well as private land owners across the region.

He is Head of Residential Development at the Cambridge Office.

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Steven is Partner and Head of Planning Southern Region and is based in our Oxford office.

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